CIS

What is the CIS?

The Construction Industry Scheme (CIS) is a tax system that was set up by HMRC to collect payments on account from subcontractors in the construction industry. Contractors will verify the status of a subcontractor and make the necessary deductions from their payment depending on their verification status. Subcontractors will either be not registered with HMRC (taxed at a higher rate of 30%), registered under deduction (taxed at the standard rate of 20%) or registered for gross payments. To register for gross payments a subcontractor must meet certain criteria.

Benefits

Working as self-employed comes with many benefits, not least being able to decide when you want to work and where you want to work. Being self-employed and contracted to Stonebridge also provides you with the following advantages:

  • Full public liability and personal accident insurance

  • Registering for VAT and reclaiming your input VAT

  • Claiming business expenses in your tax return

  • Reduced administration burden – we provide you with a weekly self-bill invoice and ensure you are paid faster than if you were working directly for the end client

  • Advice on employment status

  • Easy to understand contracts, so you know exactly what you’re agreeing to

Agencies also profit as they are able to supply the best tradesmen, as well as:

  • Specialist advice on the contractual supply chain

  • Insurance cover for challenges on employment status

  • Streamlined registration processes to ensure subcontractors are registered in time for payment each week

  • Guaranteed compliance with CIS regulations such as verification, deductions and reporting

  • Fully insured subcontractors

Self-employment outside of construction

If your work does not fall under the scope of the construction industry, for example if you are a quantity surveyor, driver or gardener, you can still work as self-employed and receive gross payments. As you will be paid without deduction, you will need to set aside a certain amount each time you are paid to cover your liabilities. To help you do this, please use our payment illustration guide. For a personalised illustration based on your specific circumstances, please email us at info@sbukpay.com.

Register

Once you begin trading as a sole trader, you will need to register as self-employed either by filling out a CWF1 form, if you have completed a self-assessment before, or online, if you haven’t. To register on the CIS, you will need to call the CIS office on 0300 200 3210. Ensure you have your Unique Taxpayer Reference (UTR) number when you call, which you can obtain from calling the same number. You will also need to register your UTR number with the CIS office to ensure you do not suffer a higher (30%) rate of deduction.


To register with Stonebridge as a self-employed subcontractor, please fill out our online registration form or give us a call on 02037 892490, and we will be able to take it from there.

Limited Company Services

How does a limited company work?

Numerous freelancers make the decision to operate through a limited company every day. Contractors who choose to work under this arrangement will contract their services to end clients, which allows the hirer to bring in the necessary expertise as and when needed. The limited company will enter into a contract with the hirer for the provision of services (including a pre-agreed scope of works) and invoice the hirer on a periodic basis. Whilst the limited company will need to maintain financial records and prepare and submit various returns (usually done by an external accountant), it provides flexibility and professionalism for freelancers and is also a cost-effective way for hirers to manage specific projects.

Benefits and points to consider

Limited companies are a separate legal entity to its shareholders, who own the company, and directors, who run the company. This means the company will have profits and losses and is liable for its debts. Therefore, the directors and shareholders have a limited liability, which is the extent to what they have agreed to pay the company for their shares. This is one of the main advantages of operating through a limited company in comparison with simply working as a sole trader.


When you set up a limited company you will have to keep on top of your paperwork such as invoices and expenditure and will have to keep your business bank account up to date. You should seek advice from an accountant before deciding to set up your own company, but once you have chosen to do so, you can take advantage of the following benefits:

 

  • Increased take home pay – operating through a limited company means you can draw dividends from the company which attract lower rates of taxation. You should take home around 75%-80% of your invoice value

  • Limited liability – your personal assets are not at risk when trading through a limited company as the company itself will be liable for its own debts

  • Claiming your business expenses – you will be able to claim for any expense that is incurred solely for business purposes, which will be offset against your corporation tax. Any expenses used personally can still be claimed but only to the extent they are used for business purposes. Types of expenses that can be claimed include travel and subsistence, materials and equipment, tools, professional subscriptions, accountancy fees and work phone/ internet

  • Control – as the sole director and shareholder (or majority shareholder) you have complete control of the business’ financial affairs and strategic direction, meaning you can drive the company forward in the best way you see fit

  • VAT Registration – registering for VAT allows you to reclaim the VAT that is charged to you by suppliers i.e. accountancy firms, material and equipment providers and the VAT on mileage and subsistence costs incurred. It also gives your company an increased professional image

  • Credibility – providing services via a limited company offers a professional image which increases the chance of businesses working with you. Some businesses will only deal with incorporated companies

Our service

Setting up

As part of our service, we will set up your limited company for you and appoint ourselves as your agent. This allows us to handle your tax affairs on your behalf and correspond with HMRC. All you will need to do is provide us with your desired company name and we will check that it is available, and if it is, we can proceed with the incorporation. In order to complete and send the application, you will need to decide on the following:

 

  • Company officers – you will have to appoint directors and shareholders. For directors you will need to supply their name, residential address, date of birth, nationality and occupation. Shareholders will also need to supply information as well as sign the “electronic signature”, which is made up of specific personal information for each person e.g. mother’s maiden name, town of birth, fathers first name

  • Statement of capital – limited companies with only one director will usually be formed with ten ordinary £1 shares. If you are the sole director of the company, we would advise allocating yourself ten shares. A minimum of one share needs to be issued to each subscriber.

  • Registered office address – your registered office address will be where you receive all correspondence regarding your limited company, such as communication on your tax affairs and bank statements, and it will be entered into Companies House database so can be viewed by anyone. The address must be in mainland UK.

You will receive your Certificate of Incorporation via email within 10 working hours, which will show your company name and company number. We will then proceed with registering your company for the necessary taxes i.e. PAYE and Corporation Tax.

 

Ongoing services

Once your company has been incorporated and you are all set up and start trading through it, we will look after things from there. Depending on what level of service you have signed up for, we will provide you with:

 

  • Registration of your limited company for Corporation Tax, VAT and PAYE with HMRC.

  • Year-end accounts (subject to a minimum fee having been paid)

  • Corporation Tax returns

  • Quarterly VAT calculations and returns

  • Free, bespoke contractor accountancy platform

  • Payroll processing and administration

  • Advice on the best way to draw money out of your company

  • Assistance with expense processing and what’s allowable

  • Personal tax return

 

If you are interested in setting up a limited company and would like to work with us, then please give us a call on 0203 789 2490 and we will be happy to assist you.

 

Umbrella

What is an umbrella company?

An umbrella company is an employer for contractors who work on temporary assignments.


Often people who find work through a recruitment agency will be employed by an umbrella company, which means they can maintain one employer whilst on multiple assignments. Umbrella companies can also work directly with end clients.


An umbrella company will have contracts with various recruitment agencies and end clients, and will invoice for the work their employees have carried out.


When the payment of the invoice is made, the umbrella company will retain their margin and deduct any other company costs, such as employers National Insurance and employers pension contributions. The employee will then be paid, less employees National Insurance contributions and income tax.

Benefits

Being employed by an umbrella company comes with numerous advantages, such as centralising your financial affairs even if you are working on a number of assignments with different agencies. You will also get the benefit of:

 

  • Being eligible for all statutory payments such as sick pay, maternity pay and paternity pay

  • Not being required to submit a self-assessment at the end of the tax year, unless you are asked to do by HMRC or have any undeclared income

  • Being covered by our Employers and Public liability insurance

  • Receiving advice on what expenses you can claim for and when you can do this

  • An employment status meaning there is no worry of IR35 or MSC legislation


Recruitment agencies that have workers supplied by an umbrella company are able to benefit from:

 

  • Being relieved from the burden of directly employing contractors, such as employment rights and having an in house payroll team

  • The umbrella company handling queries regarding pay, tax and any employment related matters

  • Compliance with AWR, auto-enrolment, PAYE and NI legislation, MSC legislation, NMW and IR35

  • Right to work checks completed

  • A client portal

Register

If you would like to register on our umbrella scheme, then please either fill out our online form or give us a call on 0203 789 2490 and we will be happy to help.

 

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